During a recent conversation with Mark Kelley, M.D., the chief executive officer of the Henry Ford Health System's Medical Group, about Medicare's accountable care organization efforts, Kelley mentioned that Henry Ford is also interested in the upcoming Bundled Payment for Care Improvement effort.

And much like its more-publicized ACO program, CMS is beginning to sharpen the details of the bundled payment program ahead of a 2012 launch. In late August, CMS invited providers to begin submitting bundled payment applications for four models of care, all of which are based on CMS paying providers a discounted amount based on current costs.

  • In the first model, the episode of care would be defined as an inpatient stay in an acute care hospital.
  • The second model would include inpatient and post-acute care from either 30 or 90 days following discharge, with the bundle including physician's services, post-care care, readmissions and other related services.
  • The third model would begin at discharge from an acute care facility.
  • In the fourth model, hospitals would receive a single bundled payment from CMS that covers all services furnished by the hospital, which would then pay physicians and other practitioners from the bundle.

The bundled payment initiative, Kelley says, is more hospital-centric than the ACO program — and more directly focused on hashing out how hospitals and physicians will share reimbursements in a post-fee-for-service payment system.

"Hospitals and doctors are battling each other over where the money is and who gets the revenue," Kelley said. "Bundled payment basically forces them to come together."

The program may be of interest to a larger group of providers than the ACO program, Kelley noted, because the payment structure would have hospitals accept a discounted rate from Medicare based on their current costs. That means that hospitals whose costs are currently above national benchmarks have room to participate in the program and improve while bundled payments are still voluntary, he said.

"Sooner or later, some of us think bundled payments are a certainty in Medicare," Kelley said. "Those that can't make it under bundled payments will have a lot of problems."

Is your hospital looking to participate in CMS's Bundled Payment program? Email your thoughts to hbush@healthforum.com.

Haydn Bush is senior online editor for Hospitals & Health Networks magazine.